Cautious Stance on Softcat: Sell Rating Amid Slowing Growth and Potential Overvaluation

Charles Brennan, an analyst from Jefferies, maintained the Sell rating on Softcat. The associated price target remains the same with p1,450.00.

Charles Brennan has given his Sell rating due to a combination of factors related to Softcat’s recent performance and future outlook. The company’s first-quarter trading statement indicates strong year-over-year growth, which is positive, but the growth is expected to slow down as the year progresses due to tougher comparisons.
Additionally, while the initial performance aligns with full-year guidance, the previous year’s results were bolstered by a significant data center contract, which may have set a conservative baseline for future expectations. Consequently, the market consensus slightly exceeds the company’s guidance, suggesting potential overvaluation and justifying a cautious stance.